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London Calling

Another week and another shuttle trip to London. My purpose is to support the fundraising for a new investment vehicle for Central and Eastern Europe, and although slow, there is steady progress towards raising a fairly modest €100 million.

Yet London is not what it was as far as investment in CEE is concerned. The City is ruled by fashion as much as anywhere, and in the emerging markets world what's hot and what's not can change in a very quick order. Despite the generally impressive performance of the region over the past two decades, for all practical purposes CEE ceased to be of general interest after the August 1998 default of Russia. ironically it is now only Russia that seems to capture the imagination of those who are not specialists. Yet Russia remains incredibly challenging both as a market and as a place. Never mind that Poland or Estonia have turned in economic numbers that put Russia in the shade, the fashionable investors will track Moscow but not Warsaw. In fact the world of fashion, sorry I mean investment, finds more opportunity in Africa, and that is now where London emerging markets investors want to make their mark.

Partly, I suppose, there is some kind of folk memory of a time when British investors like Cecil Rhodes made their mark and their fortunes in the dark Continent and partly, I suppose there is no longer the resentment that one of another of Africa's "big man" leaders had towards the West. After the fall of the USSR, there is only the Chinese left to meddle and their attitude is -if anything- even more exploitative towards African resources than the West.

So as I- rather wearily- put myself onto yet another flight to visit investors, I reflect that the people I am talking to are generally expert specialists- it reduces the number of people I can talk to, but at least the conversations don't start with geographical explanations. On the other hand, the real money for the region has long since left the UK. The regional specialist development bank, the EBRD, retains its headquarters in the City, but private sector money returned to Germany or the Nordic states, or even settled in the region- especially Warsaw- a decade ago.

The caprices of fashion have not yet returned the City's gaze back onto Central Europe, and with so many rival centres, I wonder if it ever will.
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